CHEERS Act Offers Tax Break for Energy-Efficient Kegs and Taps in Bars and Restaurants

The new Creating Hospitality Economic Enhancement for Restaurants and Servers Act, or CHEERS Act, is a targeted tax change aimed squarely at the hospitality industry. What it does is simple: it allows restaurants, bars, and entertainment venues to claim a commercial energy efficiency tax deduction when they buy new, energy-efficient equipment used for serving draft drinks. This isn't just about saving the planet; it’s about saving money for the businesses that keep our local economies moving.

The Stainless Steel Tax Loophole

Under current tax law, businesses can get deductions for making their buildings more energy efficient. This bill carves out a new category called "qualified energy-efficient draft property" (SEC. 2). Essentially, if you run a bar or restaurant, and you buy a new stainless steel or aluminum keg or the commercial tap equipment used to dispense alcohol, and that equipment meets the standard energy-efficiency requirements, you can now claim that deduction. This is a big deal because the bill explicitly bypasses a specific existing tax code limitation that would normally prevent this kind of equipment from qualifying. If you’re a small business owner who has been putting off upgrading that old, energy-sucking draft system, this tax incentive might be the nudge you needed to invest in a modern, cost-saving setup. For the average person, this could mean slightly lower operating costs for your favorite local spot, potentially helping them keep prices stable.

What Counts and Who Pays

To qualify, the property must be used mainly by a business that runs a restaurant, bar, or entertainment venue. The idea is to incentivize the industry to modernize its dispensing equipment, which can use a surprising amount of energy. Think about the massive cooling units and lines required to keep beer cold—making those systems more efficient reduces the operational overhead for the business owner. The change applies to any qualifying equipment placed into service after the date the Act becomes law. This means the benefit is immediate for those ready to upgrade.

The Treasury’s Homework

While the concept is straightforward, the implementation has a few moving parts. The bill tasks the Secretary of the Treasury with writing up the necessary rules and guidance to make this work (SEC. 2). One specific area they need to figure out is how to handle equipment that is leased or rented instead of owned outright. This is crucial because many restaurants lease their specialized equipment. Clarity here will determine whether the lessor (the company renting the equipment) or the lessee (the restaurant) gets to claim the tax break. If the guidance is vague, it could lead to confusion and disputes, slowing down the adoption of these new energy-efficient systems.

For the average taxpayer who doesn't own a bar, this is a targeted tax expenditure. It means the government is forgoing tax revenue to incentivize a specific industry to adopt energy-saving equipment. While the direct benefit goes to the bar owners, the indirect benefit is potentially lower energy consumption overall and a modernized, more resilient local hospitality sector.